NuclearPhynance Archive

Maggette · Post by **Maggette** » Thu Oct 30, 2008 10:48 am

@MIB

"Usually these options are cash settled but with an option to physically settle if both parties agree to it some time prior to expiry."

I ask myself if this extra option (to convert to physical settlement) is priced and if so, how is this done...or is it of no additional value, because both parties have to agree...

thanx

HankScorpio · Post by **HankScorpio** » Thu Oct 30, 2008 1:25 pm

Porsche and VW share row: how Germany got revenge on the hedge fund 'locusts'

rowdyroddypiper · Post by **rowdyroddypiper** » Thu Oct 30, 2008 1:47 pm

Holy balls of catshit. Does the moron saying this is a black eye for capital markets everywhere really believe that? The market has been out of eyes to blacken for months. I mean did a guy putting on a massive trade in VOW not really know what the disclosure rules were for the company? Or the company that was likely to acquire them? Which are in the same jurisdiction? I mean that level of attention to detail doesn't give me much hope for the rest of their book. I'm imagining a discussion in the not to distant future when one of these nitwits is informed that when yields go up bond prices go down. They do whaaaaaaaa?!?!?!?(in a Moe Szyslak voice)

FDAXHunter · Post by **FDAXHunter** » Thu Oct 30, 2008 2:00 pm

Well.... there's vol. And then there is Mickey Mouse vol. And it's hard to take anything to do with Mickey Mouse seriously.

There are a lot of issues that this raised, many of them to do with the DAX and Deutsche Börse itself. And that's not so good.

Maggette · Post by **Maggette** » Thu Oct 30, 2008 3:46 pm

"There are a lot of issues that this raised, many of them to do with the DAX and Deutsche Börse itself"

Can you give some insight? thanx

Cheng · Post by **Cheng** » Thu Oct 30, 2008 4:22 pm

The weight of a DAX member is capped at 10% and reviewed quarterly. VOW had a weight of 27% at the top if mind serves me well. Discussions were going on to reinforce the cap before the quarterly review or to kick VOW out of the DAX since the free float dropped dramatically. Deutsche Börse initially refused to do anything, now they capped it.

FDAX, pls correct me if I am wrong, you're da expert.

Graeme · Post by **Graeme** » Thu Oct 30, 2008 4:25 pm

The news report posted by HankScorpio has been critised as full of nonsense. Well, you should unpack it into where a. you think the reporter is talking absolute rubbish b. the reporter is, er, reporting what people say, and these are things that you think are absolute nonsense.

Modulo the one place in the body where the reporter describes short selling as a 'murky practice', the report is quite simply that, a report, and not an editorial. Personally I find it quite a good synopsis of what has happened. At the end of the report some fairly uncontroversial predictions are made.

Maggette · Post by **Maggette** » Thu Oct 30, 2008 5:13 pm

If my mind serves me well, a company gets kicked out of the dax, if its free float is below 5% for two days in a row....this didn't happen....the german media was all about VOW "poluting" the DAX and that traders wanted that stock to be kicked out ....I don't get it, everybody knows (or can find it on the Deutsche Börse web page) that the index weights are determined by trading volume and market capitalization of the free float. So it was quite obvious what can happen to the weights in the DAX if a stock is in a merger situation and the market gets cornered, right? So why is everybody so worried about the "image" of the DAX? The DAX went up even so almost all of its stocks went down. So what? Where is the drama? I don't fet it..

cheers

FDAXHunter · Post by **FDAXHunter** » Thu Oct 30, 2008 6:19 pm

Try benchmarking to the DAX and you see what will happen. VOW at the peak was responsible for almost 1,000 DAX point move... or a 25% rate of return. If you didn't hold any VOW, you just lagged the index by... 25%, or about 4 years of performance. If VOW gets taken over or removed from the index, this performance is locked into the DAX. Forever (the beauty of indexing, indices never have negative surprises. Only positive ones (unlike the index portfolio itself)).

As to your comment with regards to takeovers... in a takeover a large cap stock will double, at the most. Mind you that the price Porsche paid is something like 180 EUR on average (or something like that), which is already more than quite a few people think its worth.

So, in short, this is well beyond "takeover territory". Well beyond. For phuck's sake: the thing became the most expensive company in the world at some stage!

mib · Post by **mib** » Thu Oct 30, 2008 6:26 pm

FDAX: If you didn't hold any VOW, you just lagged the index by... 25%

well, if you are benchmarked on an index and holding nil in one of the big and volatile components, this is a bet you made. I fail to see what it has to do with index "image"

Maggette: what is priced in these options is that the buyer is holding a large stake directly ${L_SMILIES_WINK}$